PLEASE HELP ME SOLVE THIS ASAPProvide solution! "Suppose that a person in the 45% tax bracket invests $3000 at 10% per year, compounded annually,for 8 years, and pay taxes on all the interest received. By how much will be the loss in purchasing powerof the original principal, giiven an annual inflation rate of 8%?A. 48구구.98B. 수라구4.34C. $512.57D. $409.58

Purchasing Power is the real buying capacity or potential of the individual. Purchasing power is…

Answered: "Suppose that a person in the 45% tax…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. Muhammad invest $12,000 in a GIC paying 2.25% effective annual interest. Muhammad computes his real (inflation adjusted) rate of return rreal = 0.491%. What is the effective annual inflation rate i?
Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, calculate the TAX SHIELD. %3D Expected interest year 1 = 50; year 2 35; year 3 = 20; year 4 10; 5 = 0 %3D !! %3! O 101.36 O 158.33 82.85 O 46.37
7. Suppose a college student earns $60,000 per year after graduating and works for 50 years. The interest rate is 3%. What is the present discounted value of their life-time earnings (assuming no growth in wages)? a) $ 0.1 million b) $ 6.77 million c) $ 1.59 million d) $ 1.8 million e) $ 16 million
Problem 8. What is the equivalent worth in year 5 of the following series of income and disbursements, if the interest rate is 10% per year? Year Income, S 0 0 1-5 6000 6-8 6000 9-14 8000 Answer: Equation: CFD: Expense, S 9000 6000 3000 5000
Suppose your principal investment is $1800 and you have a nominal interest rate of 6.5%. what is your nominal interest income? Presume you are taxed at the 22% tax rate, who much will you pay in taxes and what is your after tax nominal income? Presume inflation was 2.7% during the year, what is the loss of principal due to inflation? What is your real interest income? What is after-tax real interest income?
Suppose the interest rate was 20% and the person earned 10K today. At point A, the person consumes the income he earns each year and does not borrow or lend. The value X is The value of W is Enter whole numbers without decimal points or dollar signs, e.g. enter $30,000 as 30000. Income/Consumption 1 Year in the Future w $24,000 Income/Consumption Today
49) Find the interest on P5000 at 7% for 3 years. A. P11,666.67 B. P10,500 C. P2,142.86 D. P1,050 50) How much was borrowed if the interest at 12% after 4 years is P6,000? A. P12,500 B. P18,000 C. P20,000 D. P2000,000
10. . You start to save for a major purchase. You can invest GH¢320 every three months for 3 years and 9 months. You are able to earn 5.34% compounded semi- annually. What is the amount of interest that you earn during the entire term? * c. GH¢472.26 a. GH¢468.54 d. GH¢2506.00 b. GH¢5272.26 11. How much interest will be earned on GH¢5,000 deposited today that will earn a 4% compounded quarterly and will be invested for 6 years? * a. GH¢1,326.60 b. GH¢6,326.60 d. GH¢1,348.67 c. GH¢6,348.67
Assume you invest $1 000 at the end of this year, at the end of the second year, and at the end of the third year. How much will you have at the end of the fourth year if interest rates are 5% p.a.? Select one: a. $3,405.54 b. $3,310.12 c. $3,215.41 d. $3,100,21
Using the same data for 2 parts: Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21% Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 Part A) Discount the year 4 expected payment back to time 0 (today). a) 9.31 b) 10.11 c) 13.65 d) 6.50 Part B) Calculate the Tax Shield a) 101.36 b) 46.37 c) 158.33 d) 82.85
Consider a perpetuity with a coupon of 100. Imagine that the perpetuity is purchased at time t when the market interest rate is equal to 5%. Furthermore, imagine that the coupon income is taxed at 40% and that capital gains are taxed at 20%. What is the after tax rate of return if the perpetuity is sold at time t+1 when the market interest rate continues to be equal to 5%? 0% O 2% 5% None of the above
What amount must you invest today at 6% compounded annually so that you can withdraw $5,000 at the end of each year for the next 5 years? O a. $12,300.0 O b. $20,540.8 O c. $21,061.8 O d. $22,548.8

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